B-Stock: The Transformation of the Liquidation Industry

We are delighted to share our thoughts on Spectrum Equity’s recent investment in B-Stock and the opportunity the
company addresses for inventory-bearing businesses: B2B liquidation.

The Growing Challenge: Returns

The retail and ecommerce landscape has shifted rapidly over the last few years. Companies have competed fiercely by streamlining their operations in the hopes of enhancing margins and providing
the most consumer-friendly shopping experiences possible. For example, executives have poured investments into forward logistics operations to create responsive supply chains, achieve two-day
fulfillment, and support multi-channel customer journeys, among other objectives. Simultaneously, they have adopted more generous return policies, matching standards set by leading ecommerce
companies and the largest traditional retailers.

In aggregate, these changes have made life much easier for consumers, and – in at least some ways – more difficult for the companies that serve them. Consumers fully expect previously
unimaginable levels of convenience, and they habitually avail themselves of frictionless returns by purchasing and shipping back extra items. In turn, global retail and ecommerce companies, as
well as their wholesale and manufacturing vendors, are becoming bloated with increasing amounts of excess and returned inventory, which are estimated to be worth more than $1.4 trillion.

The Overlooked Opportunity: Liquidation

Underneath the growing mounds of inventory lurks yet another trend: most retailers and ecommerce businesses have historically overlooked or inefficiently managed their liquidation processes. In
the most startling cases, some Fortune 500 companies have resigned simply to discarding inventory – literally throwing away margin into compactors. In more common cases, companies have become
beholden to contracts with one or a few buyers who repeatedly and aggressively negotiate down the prices they pay for truckloads of liquidation inventory.

The Leading Solution: B-Stock

Against this backdrop, many of the largest and most sophisticated retail and ecommerce companies are paying increased attention to the tremendous value they’ve left on the table in their
liquidation practices and turning to B-Stock. B-Stock helps the world’s leading manufacturers, wholesalers, and retailers – including nine of the top ten retailers in the US – liquidate billions
of dollars of bulk inventory. Using competitive, online, B2B auctions that reach a global network of hundreds of thousands of registered and approved resellers, B-Stock’s marketplaces ensure
customers maximize revenue recovery on liquidation inventory and facilitate efficient liquidation processes. Additionally, B-Stock’s digital solutions provide customers with control over where
their inventory flows, as well as detailed analytical insights about their supply chain and liquidation merchandise, none of which are possible through traditional approaches to
liquidation.

Representative B-Stock Client Marketplaces

B-Stock represents a classic Spectrum investment, and the company’s business model builds on our expertise with vertical-focused marketplace businesses. B-Stock has emerged as a clear leader in
the liquidation market and built up a highly defensible network. The company has distinctive access to a steady stream of supply across diverse product categories from top brands and retail
sellers, as well as a large, rapidly growing base of registered bidders, including discount stores and other resellers. This network allows sellers to achieve unmatched recovery, velocity, and
transparency, and it disintermediates the traditional liquidation supply chain by bringing thousands of bidders into direct contact with the highest quality inventory from the world’s most
reputable sources.

The company exhibits many of the hallmarks that defined our other leading vertical-focused marketplace businesses, such as Grubhub, Teachers Pay Teachers and WeddingWire. Furthermore, B-Stock’s seasoned
leadership team has built the business with a consistent emphasis on sustainable growth, putting it on a path to shape its industry and become an enduring enterprise. More specifically, the
company has been profitable for nearly ten years and achieved a compound annual growth rate over 100%.

B-Stock has built the leading digital solution for a growing global challenge, and it exemplifies many of the attributes we look for in portfolio companies: rapid growth; disciplined,
forward-thinking management; and business model strength. We are proud to partner with the B-Stock team in this next stage of growth to further scale operations, continue to transform the
liquidation industry and provide unparalleled technology solutions to B-Stock’s customers.

For more information on B-Stock and Spectrum Equity’s growth investment, please read the press release.

The specific companies identified above may not represent all of
Spectrum’s investments, and no assumptions should be made that any investments identified were or will be profitable. View the complete
list of our portfolio companies.